Can we have continued economic growth and tackle climate change?
This is the great question of the 21st Century, really, and it’s as hard to settle as it is vital.
For the longest time, it was seen as rather axiomatic that getting carbon emissions down to a sustainable level would mean saying “goodbye to growth.” This was phrased in different ways – usually with some vague comment about how we’d all be better off if we didn’t care so much about ‘stuff’ and how a post-growth society could be fairer, more peaceful, more equal, etc. (See for example Affluenza and Prosperity without Growth, or the provocatively-titled website Make Wealth History.) This seems to be intuitively sensible to quite a lot of people, and there’s a veritable cottage industry devoted to helping people ‘live sustainably’ by reducing their economic activity in order to reduce their personal carbon footprint - growing their own food and so on.
In more recent years, though, this reaction has been roundly challenged by a more optimistic view, apparently nicknamed ‘bright green’, which believes that a combination of technological improvements can enable us to reduce emissions to below dangerous levels without sacrificing (much) economic growth - or the key aspects of our cosy Western lifestyles. This view has quickly become the mainstream view amongst policymakers – particularly since the 2007 Stern report, which argued addressing climate change was achievable for the cost of a few % of GDP growth. (It’s also Al Gore’s basic position.)
It’s also a view I’m instinctively drawn to, as I wrote years ago. The assumption that growth must end seems to be based on the assumption that our use of energy is as efficient as it could possibly be, which seems silly. And the idea that we’d all be better off with less stuff might make some sense to comfortable Westerners, but it’s poison to millions of people in developing countries for whom economic growth means increased health and opportunity.
(Yes, not all economic growth is pro-poor. But you only have to watch one of Hans Rosling’s TED talks to realise that, at a big-picture level, it is only with significant GDP growth that countries ever really achieve lasting improvements in health.)
But there continues to be a loud minority of people, including noted ecologists, who believe economic growth – and with it, continuing consumption of lots of shiny things, and the expansion of the consumption of lots of shiny things to more and more of humanity – can’t continue. I’m currently reading The End of Growth by Richard Heinberg, published in 2011, which makes this argument.
But all this is just talk unless you delve into the numbers a bit and try to really look at what can and cannot be achieved through a combination of energy efficiency, renewable energy, other clean fuel technologies, and so on.
One influential study along these lines which I recently read was published by McKinsey, the consulting firm, in 2008. The headline is encouraging, to say the least. McKinsey argue that abatement – that is, reduction in the amount of greenhouse gases in the atmosphere – of the kind needed to keep atmospheric GHGs down to below 500ppm will cost between 0.6% and 1.4% of global GDP by 2030. That amounts to a hit on economic growth, but not an end to it.
The really interesting thing about the McKinsey study, though, is the way it frames the issue – using the useful concept of ‘carbon productivity.’
At its most basic, the ‘no more economic growth’ idea assumes that the amount of global warming associated with an average unit of economic activity – the amount of coal you have to burn to buy an extra £1 of GDP, essentially – is fixed and that therefore, any effort to reduce tour emissions means reducing our economic activity. This is plainly nonsense, but you do hear even this extreme version repeated every now and then.
In fact, as I explained ineptly years ago, reducing economic activity is just one way to reduce emissions. You can also reduce the amount of energy it takes to conduct a unit of economic activity, for example by reducing energy waste; or reduce the amount of greenhouse gases produced by a single unit of energy, which is where clean energy comes in. Most of the different things you associate with reducing climate change – from changing lightbulbs to wind farms – come into one of these categories. A few, like ‘flying less’ or ‘not replacing your TV every two years,’ come into the ‘less economic activity’ category, as do discussions of trying to reduce the rate of global population growth.
What McKinsey bring to the table is the useful idea of ‘carbon productivity’ as a way of combining these two important ratios – energy per £ of GDP, and greenhouse gases per unit of energy – into a single measure. Carbon productivity is the amount of GDP you gain from burning a ton ‘CO2e’, which means ‘CO2 and equivalently damaging amounts of other greenhouse gases.’ The report says:
We estimate that to meet commonly discussed abatement paths, carbon productivity must increase from approximately $740 GDP per ton of CO2e today, to $7,300 GDP per ton of CO2e by 2050 – a tenfold increase. This is comparable in magnitude to the labour productivity increases of the industrial revolution.
It’s also not a million miles away from my estimate, back in 2007, that “we’ve got to get the level of emissions associated with each unit of human economic activity down to one-twelth its current level.” One-tenth, one-twelfth; potayto potahto, right?
This sounds very simple, and it is, but it’s a surprisingly effective way of thinking about the challenge ahead. If you think about needing to cut carbon emissions by 50% or 60% or 80% by 2050, all while China expands and Africa breeds and TVs grow ever larger, it’s easy to throw up your hands and conclude something has to give. But a tenfold increase in carbon efficiency? That sounds feasible, if difficult. And McKinsey argue that in fact it can be done.
How to do it? McKinsey plotted various fixes, all based on existing technologies – no magic bullets being relied on here – on a cost graph. They include:
- Energy efficiency: cut energy use per £ GDP through insulating homes, offices and factories, improving the efficiency of power infrastructure and vehicles, and – yes! – changing lightbulbs;
- Decarbonising energy, through renewables, carbon-capture and storage and nuclear. No room for Fukishama squeamishness here: “The sector will have to pull all possible levers,” the report says;
- Investing in speedier development of currently infant technologies, including carbon-capture and storage and ‘integrated combined cycle gasification’, which I’ll admit I don’t know anything about; and in faster deployment of well-developed technologies like renewables;
- Changing the behaviour of businesses and customers, to reduce things like packaging;
- Preserving ‘carbon sinks,’ particularly forests.
That’s it. No giant space mirrors and no grow-your-own food. Just efficiency and carbon sinks, the least technological solutions, account for almost a third of the total abatement potential.
Those who believe that climate-friendly growth is possible tend to take this broad approach. They acknowledge that no one ‘fix’ – be it renewables, efficiency or behaviour change – can make the necessary improvements. But they crunch the numbers and find that a combination, pushing each technological advance to a high level of refinement and deployment, can get us there at relatively low cost. It seems, on the face of it, a much more scientific approach than the ‘we can’t live like this any more!’ school. Any challenge seems less daunting if you actually face facts and look at the numbers in detail.
But do McKinsey’s numbers add up? Their estimate for future global GDP growth is an average of 3% a year, broadly in lines with recent trends. That’s a figure I’ve seen elsewhere. They assume an increase in world population to 9billion by 2050, again in line with popular wisdom. Obviously, if either economic growth or population growth (or both – they’d probably go together) is greater, you’d need to abate emissions more effectively.
One limitation of McKinsey’s approach is their target of 500ppm for atmospheric greenhouse gases. Most scientists now believe 450ppm is the upper limit for avoiding dangerous climate change, and some believe only 350ppm is really safe. Getting to 350ppm would be much, much harder, requiring cuts of something like 80% of global emissions from 1990 to 2050 – as opposed to the 60% required by 450ppm. To allow for the growth of developing countries, that would mean rich countries reducing their emissions by much more, 90-95%. Given that we can barely get going on 450ppm, aiming for 350ppm seems like ‘letting the better be the enemy of the good enough’ at this point. (But if I was the president of the Maldives, a country which 450ppm might leave underwater, I’m sure I’d feel differently.)
Another issue is that four years have gone by since the report was published with less progress on carbon productivity than the report calls for, so we’re already ‘behind schedule.’ But the reductions in carbon emissions caused by the financial crisis and recession have helped mitigate that.
I haven’t read a rebuttal anywhere of McKinsey’s numbers, though I haven’t read much ‘post-growth’ literature yet so I may still find one. But even if there are some quibbles at the edges, McKinsey surely at least clearly demonstrate that it’s premature to start thinking the age of economic growth is over.
We may ultimately not quite be able to defeat climate change just by doing the same things we do now, and more of them, more cleanly and efficiently. But the majority of the burden of reducing emissions must be carried by carbon productivity, not reducing economic activity. McKinsey calculate that for humanity to meet a sustainable level of emissions in 2050 with a world population of 9 billion, each person will have an average greenhouse gas ‘allowance’ of 6kg per day. At today’s level of carbon productivity, that’s equivalent to either a 20-40km car ride, a day’s air conditioning, two new t-shirts or 2 meals. That’s all either-or. To emphasise carbon austerity over carbon productivity is to sentence mankind to a life of misery.
In practice, I don’t think that’s what most people who talk about the ‘end of growth’ intend. Scepticism about the potential of technology – and it’s far from clear any of what McKinsey proposes is politically feasible – naturally leads people to sweeping statements about how we must ‘learn to live with less.’ But when data is published which argues, with numbers which I hardly fully understand but certainly seem convincing, that we can maintain our way of life and continue to grow while tackling the climate problem sufficiently, it seems perverse to spend time preaching the way of climate-friendly penury.
But let me finish The End of Growth, and I’ll tell you if I’ve changed my mind.
Climate blogger Joe Romm has published a ‘solution’ to climate change that’s similar to McKinsey’s, though he doesn’t spend as long addressing the economic costs and benefits.